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Mehlman v. MOBIL Oil Corp.

March 26, 1998

DR. MYRON A. MEHLMAN, PLAINTIFF-RESPONDENT,
v.
MOBIL OIL CORPORATION, A NEW YORK CORPORATION, DEFENDANT AND THIRD-PARTY PLAINTIFF-APPELLANT, AND F.M. CUNNINGHAM, C.R. MACKERER, IRIS KAPLAN, NORMAN MORGAN AND K.A. TORTORIELLO, DEFENDANTS-APPELLANTS,
v.
PRINCETON SCIENTIFIC PUBLISHING CO., INC., THIRD-PARTY DEFENDANT.



On certification to the Superior Court, Appellate Division.

The opinion of the court was delivered by: Stein, J.

A-5 September Term 1997

Argued September 9, 1997

The primary question presented by this appeal is whether the Conscientious Employee Protection Act, N.J.S.A. 34:19-1 to -8 (CEPA), protects an employee from retaliatory action taken against him in New Jersey by his New Jersey employer because the employee objected to a practice that he reasonably believed was incompatible with a clear mandate of public policy designed to protect the public health and safety of citizens of another country. A threshold issue is whether the evidence adduced at trial was sufficient to satisfy plaintiff's burden of proving the existence of a clear mandate of public policy. Collaterally, we also address whether in CEPA litigation the existence of a clear mandate of public policy is a fact question for the jury or a legal issue for the court and, if the latter, whether this trial court's failure to instruct the jury on whether the evidence at trial established the existence of a clear mandate of public policy constitutes error mandating reversal of the jury verdict and award of damages on the CEPA claim.

Those and other issues raised by Mobil Oil Corporation (Mobil) in its petition for certification and appeal as of right, see Rule 2:2- 1(a), relate to the claim of respondent, Dr. Myron A. Mehlman (Mehlman), formerly Mobil's Director of Toxicology and Manager of its Environmental Health and Science Laboratory, that Mobil had discharged him in November 1989, in retaliation for his objection to the sale by Mobil Sekiyu Kabushiki Kaisha (MSKK), Mobil's Japanese subsidiary, of gasoline containing levels of benzene in excess of five percent. Mehlman sued Mobil alleging, among other claims, that Mobil fired him in violation of the Conscientious Employee Protection Act (CEPA), N.J.S.A. 19-1 to -8. After a ten-day trial, a jury returned a verdict for Mehlman on his CEPA claim and awarded him $3,440,300 in compensatory damages and $3,500,000 in punitive damages. The trial court granted Mobil's motion for judgment notwithstanding the verdict pursuant to Rule 4:40-2(b), concluding that Mehlman had not proved the existence of a clear mandate of public policy that he reasonably believed Mobil had violated, as required by CEPA. See N.J.S.A. 34:19-3(c). Although the trial court vacated the compensatory damages award, on Mehlman's motion the court amended the complaint to conform to evidence supporting a prima facie tort claim, entering judgment for Mehlman on that claim and on that basis sustaining only Mehlman's punitive damages award.

In a published opinion, the Appellate Division vacated the judgment on the prima facie tort claim on the ground that it was precluded by CEPA's waiver-of-claim provision, N.J.S.A. 34:19-8. 291 N.J. Super. 98, 137-38 (1996). The court reinstated the jury verdict and the compensatory as well as punitive damages awards on the CEPA claim, concluding that the proofs "amply demonstrate that Mehlman identified a clear mandate of public policy which he reasonably believed that Mobil had violated when he objected in September 1989 to the distribution in Japan of gasoline with an excessive benzene content by Mobil subsidiary MSKK." Id. at 130, 144. The court also reversed the pre-trial dismissal of Mehlman's defamation claim and remanded that claim for trial, concluding that that claim was not barred by CEPA's waiver provision because it was based on proofs different from those required to establish the CEPA claim. Id. at 142, 144.

We granted Mobil's petition for certification, 147 N.J. 264 (1996), and in resolving the issues presented by that petition we also address the questions that Mobil asserts as the basis for its appeal as of right.

I.

A.

Respondent Mehlman is a renowned toxicologist with impressive academic credentials and substantial working experience in toxicology on behalf of both governmental and commercial employers. After completing his Ph.D. degree at the Massachusetts Institute of Technology and a post-doctoral fellowship at the University of Wisconsin, he held faculty positions in biochemistry at Rutgers University and the University of Nebraska. Before joining Mobil he served as Chief of Biochemical Toxicology for the Bureau of Foods, United States Food and Drug Administration, and held other responsible toxicological positions in the United States Department of Health, Education and Welfare and in the Office of the Director of the National Institute of Health.

Mehlman joined Mobil's Medical Department in 1976 as Director of Environmental Health and Toxicology. In 1978 he became Mobil's Director of Toxicology, and in the early 1980s became manager of its Environmental Health and Science Laboratory, which had full responsibility for Mobil's toxicology testing. A 1988 job description indicated that Mehlman's position required an "established international reputation in toxicology and environmental science," and characterized his primary function as "represent Mobil on toxicology matters, and provid toxicologic and regulatory advice for prudent business decisions." Mehlman's major responsibilities included the representation of Mobil's interests before regulatory agencies, trade and scientific associations, and academic institutions; approval of protocols for and monitoring quality of toxicity testing; and informing Mobil of pending developments in toxicology regulations that could affect Mobil's worldwide business. The record clearly demonstrated that Mehlman's responsibilities as Mobil's Director of Toxicology were broad and of international scope.

Mehlman's expertise in toxicology and biomedical science is also reflected by his authorship of approximately 200 articles and books on those subjects. His publications include several articles on the subject of benzene toxicity, and he chaired several symposia focusing on the harmful effects of gasoline vapors. He also served as President of the American College of Toxicology.

Prior to his discharge in November 1989, Mehlman's job evaluations were uniformly positive. He received annual merit raises and stock option awards. In May 1989, Mobil's Vice President for Research nominated Mehlman for membership in the National Academy of Sciences, describing him as "an international expert in toxicology is often consulted on issues involving the toxicity of chemicals in relation to environmental health."

The event that allegedly provoked Mehlman's discharge occurred in September 1989, during a trip to Japan. Mehlman traveled to Japan to represent Mobil at an international symposium on "Industrialization and Emerging Environmental Health Issues: Risk Assessment and Risk Management." Because he was attending the symposium, Mehlman was also invited to address a group of managers at MSKK, Mobil's Japanese subsidiary, on current toxicology and environmental health issues.

Mehlman's presentation to the MSKK managers took place at Mobil headquarters in Tokyo on September 27, 1989. His topic, selected by MSKK's management, concerned the health hazards of human exposure to gasoline. Mehlman's presentation included the use of slides. During his presentation he displayed a slide that showed the volume concentration of benzene, a dangerous and toxic chemical used as an additive in gasoline, as a percentage of regular and premium gasoline content in the United States, Japan, and Europe. MSKK Technical Manager Takashi Tsunemori interrupted Mehlman and asked to see that slide again. When the slide was displayed, showing a range of benzene concentration of 2.5 to 3.5 percent in gasoline sold in Japan for regular gasoline and 2.5 to 4.6 percent for premium gasoline, Tsunemori allegedly informed Mehlman that the slide was incorrect because the benzene content in MSKK's regular gasoline was 5.7 or 5.8 percent.

Mehlman responded that "we, in United States and at Mobil[,] consider benzene as a very poisonous chemical -- dangerous and toxic. And concentrations are too high. hey have to be reduced." In response to Mehlman's inquiry, Tsunemori stated that MSKK was not required to inform Japanese regulatory officials of their gasoline's benzene content. When Mehlman insisted that the benzene level "is much too dangerous and you must reduce it," Tsunemori's response, according to Mehlman, was that "e have old equipment and we cannot do that because it will cost us several hundred million dollars to change that single refinery to produce a product with low levels of benzene." Mehlman replied: "You reduce it or do not sell it," and he described the reaction of the other MSKK managers as "stunned, shocked and surprised."

Tsunemori testified at trial as a witness for Mobil and denied that he had informed Mehlman during his September 1989 presentation to Mobil managers that the benzene content of MSKK's gasoline was 5.7 or 5.8 percent. He testified that he recalled no "meaningful" Discussion during Mehlman's presentation, took no notes, and made no report to his superior. Tsunemori also testified that in the summer of 1989 the benzene content in regular gasoline from the three Japanese refineries that supplied MSKK was 2.1 percent, 2.9 percent, and 4.5 percent. On cross-examination Tsunemori acknowledged that the average benzene level in MSKK gasoline in November and December 1989 was 4.9 percent, and that in December the benzene level ranged from 4.5 to 5 percent.

Shortly after his presentation at MSKK, Mehlman left Tokyo and traveled to Kitayushu, Japan, where he attended the First Pacific Cooperative Symposium from October 1st to October 5th. Mehlman gave the same slide presentation at that conference as he had given to the MSKK managers, but because the audience included regulators and Mobil competitors he merely noted that the actual benzene levels in Japanese gasoline are somewhat higher than those shown on the slide. Mehlman testified that he intended to discuss the problem of high benzene levels in MSKK gasoline with his superiors upon his return from Japan.

Mehlman returned from Japan late on Friday, October 6, 1989, and was informed that Anthony Silvestri, a Vice President of Mobil Research and Development and Mehlman's immediate superior, wanted Mehlman to call him. Mehlman telephoned Silvestri on the morning of October 7. Silvestri read a prepared statement to Mehlman in which he informed him that he was immediately being placed on special assignment indefinitely because of a pending investigation that had revealed a possible conflict of interest between Mehlman's responsibilities to Mobil and his activities on behalf of his wife's company, Princeton Scientific Publishing Company (Princeton Scientific). Silvestri told Mehlman that he was not permitted to appear at his laboratory while on special assignment and was expressly instructed "not to call anyone at the lab." Although Mehlman attempted to respond, Silvestri stated that no response would be permitted, and testified to his concern that Mehlman was taping the conversation. Silvestri also testified that at that time he had no knowledge or information concerning Mehlman's remarks to the MSKK managers about the benzene content of MSKK gasoline.

From October 7, 1989, through November 20, 1989, the effective date of Mehlman's discharge by Mobil, Mehlman was not permitted to return to his laboratory or to have any contact with Mobil employees. During that period, Mobil's security personnel completed an investigation of Mehlman that had been authorized by Joseph D'Ambrisi, Silvestri's immediate superior and Mobil Vice President of Research and Engineering. According to Mobil's witnesses, that investigation had been triggered by a telephone call on September 20 or 21 from Kymm Rutigliano, owner of a consulting firm hired by Mobil to improve employee communications in Mehlman's laboratory, to Silvestri informing him of reports that Mehlman was misusing Mobil assets for personal gain. According to Silvestri and Rutigliano, Silvestri immediately instructed Rutigliano to prepare a report on that subject and deliver it to him by September 28. Rutigliano delivered the report at 1:00 p.m. on September 28, but acknowledged that she "pulled an all nighter" the night before to get it done. On receiving that report, Silvestri immediately delivered it to D'Ambrisi, who in turn ordered a more detailed internal investigation of Mehlman.

On October 12, 1989, while that investigation was in progress, Mehlman attended a meeting where for the first time he heard a summary of the allegations against him. The Appellate Division describes that meeting:

On October 12, Silvestri met with Mehlman and personnel employee Gary Habla to review the allegations and to give Mehlman an opportunity to respond. Silvestri told Mehlman that he was accused of relying on his subordinates to examine papers for Princeton Scientific; employing Mobil's mail system to send out Princeton Scientific books and documents; spending Mobil's petty cash on stamps for Princeton Scientific; utilizing the services of Mobil's personnel for Princeton Scientific; using Mobil's materials and graphics equipment for brochures for Princeton Scientific; paying honoraria to laboratory visitors when they provided services for Princeton Scientific; providing Mobil grants to people who were doing things for Mehlman; and, submitting irregular travel and entertaining expense account forms. Mehlman denied some of the allegations and had no comment on others. Mehlman was neither given a written copy of the Rutigliano report nor allowed access to the laboratory to obtain records pertinent to the investigation. Instead, another meeting was scheduled for October 24 to afford Mehlman, with his attorney present, an opportunity to tell his "side of the story."

[291 N.J. Super. at 113.]

However, the proposed meeting on October 24, 1989, never occurred because it was canceled by Mehlman's counsel. Based on the final report prepared by Mobil's internal security staff, D'Ambrisi finally decided in late October 1989 to terminate Mehlman. He testified that he had no knowledge of Mehlman's remarks about benzene to MSKK managers when he decided to discharge Mehlman. At D'Ambrisi's direction, Silvestri informed Mehlman of his termination on November 2, and confirmed by letter of November 8, 1989, that Mobil was discharging Mehlman for cause.

At trial, Mehlman conceded that he had periodically used Mobil's resources to assist Princeton Scientific, his wife's publishing company, but asserted that he did so with the consent of John McCullough, Silvestri's predecessor, and because Princeton Scientific's publishing activities directly benefitted and enhanced Mobil's reputation in the relevant scientific community.

Although most of the trial testimony focused on Mobil's asserted justification for discharging Mobil for cause, the jury rejected that testimony and apparently concluded that Mobil's alleged grounds for terminating Mehlman were pretextual. Accordingly, we need not describe in any further detail the trial evidence pertaining to Mobil's asserted reasons for firing Mehlman. A more complete Discussion of that testimony is set forth in the Appellate Division's thoughtful and comprehensive opinion. 291 N.J. Super. at 111-17.

B.

The critical issue at trial was whether Mehlman satisfied his burden of proof on the question whether the sale in September 1989 by Mobil in Japan of gasoline with five percent or more benzene was "incompatible with a clear mandate of public policy concerning the public health, safety or welfare." N.J.S.A. 34:19-3c(3). In granting Mobil's motion for judgment notwithstanding the verdict, the trial court treated the existence of a clear mandate of public policy as a question of law and concluded that Mehlman had failed to prove that the sale of gasoline in Japan with five percent or more benzene in September 1989 was incompatible with a clear mandate of public policy. At trial, however, the existence of a clear mandate of public policy was presented to the jury as a fact issue. The trial court gave the jury a general instruction that attempted to define a clear mandate of public policy, described the usual sources of public policy, and briefly summarized the specific sources of public policy on which Mehlman relied. The jury, by an 8-0 vote, affirmatively answered the first jury interrogatory that posed this question: "Did Dr. Mehlman prove by a preponderance of the credible evidence that he objected to any activity, policy or practice that he reasonably believed was incompatible with a clear mandate of public policy concerning the public health, safety or welfare?"

Although it was undisputed at trial that no Japanese statute or governmental regulation in September 1989 expressly prohibited the sale of gasoline in Japan containing five percent or more benzene, the record contains substantial evidence that, combined with representations by counsel, persuasively suggested that gasoline with more than five percent benzene was hazardous to human health. For example, Mobil's counsel represented that gasoline sold currently in the United States must contain less than one percent benzene, and that gasoline sold in countries under the jurisdiction of the European Economic Community must contain less than five percent benzene. Moreover, since 1991 the Japanese government has prohibited the sale of gasoline containing more than five percent benzene.

At trial, Mehlman testified to his belief in September 1989 that benzene was carcinogenic, that excessive exposure to benzene could cause leukemia in humans, and that "in Japan, with these high levels [of benzene], you would expect to get very high concentration," and to "expose thousands and thousands of people, and I expect many thousands to be injured at this level, unlike [the United States] where we have some type of [] control." Mehlman testified to the reliability of a scientific study admitted into evidence concerning the carcinogenicity of benzene, authored by A.J. McMichael, a noted epidemiologist, that stated:

Chronic human exposure to benzene may result in adverse haematological effects, characterized by a variety of blood dyscrasias, including leucopenia, thrombocytopenia, pancytopenia and anaemia. Benzene is also considered to be a human carcinogen and is well established as a cause of leukaemia. It is recognized as being carcinogenic by the governments of Finland, the Federal Republic of Germany, Italy, Japan, Sweden, Switzerland and the U.S.A. (footnote and citation omitted.)

Mehlman also testified to Mobil's awareness of the health hazards posed by gasoline with excessive benzene content, referring to a Mobil inter-office memorandum written in April 1977 to the President of Mobil Marketing and Refining. That memorandum described benzene as toxic and a possible carcinogen, and projected that the cost of reducing the benzene level in Mobil gasoline and other products could "run into the hundreds of millions of dollars." That memorandum noted that "ontainers with 5% or more benzene are required to have a 'poison' label." Mehlman also testified to his familiarity with a 1981 Mobil management guide on product safety applicable to Mobil's United States and international affiliates that stated:

ll Mobil departments, divisions, and subsidiaries are responsible for the development, manufacture, and marketing of products in a manner consistent with applicable laws and the Corporation's high standards of safety, health, and environmental protection. In the absence of adequate local government requirements, Mobil affiliates will maintain standards of safety and health protection that consider scientific knowledge and established practices in developed countries.

Mehlman asserted that that memorandum required MSKK in September 1989 to follow Mobil's United States policy of limiting benzene levels of gasoline to less than five percent.

Mehlman also produced evidence of United States and Japanese regulations that, although not expressly prohibiting the sale of gasoline with five percent or more benzene, were germane to the question whether such gasoline was hazardous to human health. A regulation of the Consumer Product Safety Commission (CPSC) effective March 4, 1988, 16 C.F.R. § 1500, provided in part as follows: "Because inhalation of the vapors of products containing 5 percent or more by weight of benzene may cause blood dyscrasias, such products shall be labeled with the signal word 'danger,' the statement of hazard 'Vapor harmful,' the word 'poison,' and the skull and crossbones symbol."

In addition, Mehlman offered evidence of a 1987 regulation adopted by the Occupational Safety and Health Administration (OSHA), 29 C.F.R. § 1910.1028, that lowered the permissible benzene exposure limit for workers from ten parts to one part per million averaged over an eight- hour workday. The regulation exempted the sale of gasoline subsequent to its discharge from bulk wholesale storage facilities, and also exempted loading and unloading operations at bulk wholesale storage facilities that use vapor control systems. Mehlman previously had testified that vapor control systems were not used in Japan in 1989. However, no evidence implied that either the CPSC or the OSHA regulation applied outside of the United States.

Mehlman testified that when he objected to the benzene content in MSKK's gasoline, he reasonably believed that the Japanese government would have adopted laws and regulations controlling the benzene content of commercial products. Citing examples such as the use of seatbelts and the removal of lead from gasoline, he stated that Japanese regulators usually were responsive to the acceptance of United States product safety standards. Mehlman also ...


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